‘dead’ To City Hall, But Funded By The State: The High-stakes Fight Over A Los Angeles Affordable Housing Project

A fight over an affordable housing project in Los Angeles may soon affect much more than the fate of a beachside public parking lot.

State investigators are threatening to cut the city’s access to billions of dollars in housing funds and strip it of some of its zoning authority in response to its denial of a proposal to build 120 low-income apartments on the land in Venice.

The escalation of the battle follows a near decade of debate over the Venice Dell project, which would rise amid both multi-million-dollar homes and one of the city’s largest homeless communities. The dispute has become so contentious that opposing sides cannot even agree if the housing plans still exist.

In the eyes of the city, the development was axed a year ago. Venice Dell is so decidedly dead, City Councilmember Traci Park said, the project’s co-developers, Venice Community Housing and Hollywood Community Housing Corporation, are acting like “a bad boyfriend that won’t go away after a breakup.”

“I need a restraining order against them,” said Park, who represents Venice. “I don’t know how else to get the message through.”

But to state officials and the developers, Venice Dell remains very much alive. So much so that this fall the California Department of Housing and Community Development committed $42.5 million toward its construction, a lifeline for the $134-million project to move forward. Soon after the funding decision, the state sent a formal letter to the city, raising the potential sanctions should it not reverse course and approve Venice Dell.

“HCD urges the city to do the right thing,” said David Zisser, the state housing department’s assistant deputy director of housing policy.

While the city has shown no signs of backing down, its leaders are starting to feel the heat. The state’s proposed penalties have left Councilmember Nithya Raman, who leads the council’s housing and homelessness committee, “very concerned.”

“The implications of what happens in this case matter for the entire city,” Raman said. “It doesn’t just matter for this project.”

The Venice Dell saga began in 2016 when the city went in search of vacant or underutilized public land to turn into affordable housing. The 2.65-acre parking lot stood out in the once working class community that has undergone dramatic gentrification in recent decades driven in part by the arrival of tech companies. As Venice grew richer, longtime residents were pushed out, the homeless population rose and the paucity of housing for low-income residents became a pressing problem.

Then-City Councilmember Mike Bonin, who represented the area from 2013 to 2022, supported Venice Dell, while a collection of residents concerned about traffic, parking and the wisdom of building dense housing in a tsunami flood zone among other reasons, objected. At Bonin’s insistence, the project advanced, with the council ushering through a development agreement and other approvals shortly before he left office.

Among the residents with concerns was Park, who railed against Venice Dell in her campaign to replace Bonin and promised in forums to “squash this on day one.” The same election that brought Park to power also ushered City Attorney Hydee Feldstein Soto and Mayor Karen Bass into office. Feldstein Soto similarly opposed the project while campaigning, urging the city council not to make binding commitments at the behest of Bonin who she said was “on his way out the door.”

Once all three were elected, the city’s posture on Venice Dell flipped. The developers accused Park and Feldstein Soto, with Bass’ support, of working behind the scenes to torpedo the project by blocking its application for a ground lease, funding and approval from a coastal panel. A former Bass staffer responsible for expediting affordable housing told the Los Angeles Times that his superiors instructed him not to advance Venice Dell on the advice of the city attorney, which he considered “highly unusual.”

Venice Dell supporters sued the city in summer 2024, claiming Park, Feldstein Soto and Bass’ alleged actions amounted to a back-door denial that trampled fair housing laws. The city has denied the allegations in court, and the case remains pending.

Bass, meanwhile, hasn’t been shy about her deference to Park, saying in October on a podcast Bonin hosts that the rest of the city council and the mayor typically yield to a council member's wishes on issues in their district.

On Venice Dell, Bass said, “What was being asked of me was for me to step in in a way … I thought was not really going to be productive or work.”

The mayor then nodded to Bonin’s prior support for the project.

“I'm sure it was very difficult to see [Park] come in and overturn something that you had worked on for a long time,” Bass said.

Bass’ office did not respond to a list of questions from POLITICO.

Feldstein Soto, who also did not respond to POLITICO’s questions, and Park have denied doing anything improper, saying they’ve allowed the legally proscribed process to play out.

The dispute over whether the project remains viable dates to last December. That’s when the Board of Transportation Commissioners, a mayoral-appointed city panel that regulates parking lots, voted to reject a long-term lease from the city to the developers. This decision, according to Park, was the project’s death knell.

Buttressing her view, she said, is the fact that the city council could have overturned the board’s decision, but chose to let it stand.

“I don’t need an up or down vote on it,” she said. “The project is dead.”

But Allison Riley, co-executive director of Venice Community Housing, said the transportation commission doesn’t have the authority to determine an affordable housing project’s fate.

“I have never been involved in a project where this basic gaslighting around whether this deal is real or not,” Riley said. “The paperwork and the facts of the record are that it is alive.”

The developers have sued over the decision — one of nine lawsuits and counter claims filed over Venice Dell’s history, five of which are still active.

Putting aside procedural arguments, Park argued the project itself would be an expensive eyesore that’s a bad deal for taxpayers and would-be residents confined to tiny living spaces. At an October city council meeting, she referred to Venice Dell’s severe architectural design as “a hideous, massive prison structure” that “looks like a damn cruise ship crashed into the neighborhood.”

Nearly two-thirds of the apartments are planned as studios no larger than 462 square feet, making the cost even more indefensible, Park said. The current price tag is $1.1 million per unit.

“It is obscene,” Park said. “No one in their right mind should support that kind of egregious abuse of our tax dollars.”

Riley said the cost figures were misleading because they include the price tag for the land and a parking garage for residents and the public. (A second public parking garage on the property is projected to cost another $17 million.) Additionally, Riley said the developers were hamstrung by requests to restrict the project’s height and density.

In negotiations prior to last year’s approval from the California Coastal Commission, a state body that regulates construction along the coastline, the developers agreed to reduce its size from 140 units to accommodate a public boat launch for the canals.

“These studio apartments are important,” Riley said. “It’s the way to get the number of people off the street up.”

State officials upped the stakes with the letter they sent to the city in October, asking it to account for its actions “to significantly delay and effectively deny” Venice Dell. They maintained the city’s stance conflicted with fair housing obligations as well as its own master plan for housing that had previously received state approval.

At risk, the letter warned, was the city’s “pro-housing” designation, which puts it at the front of the line for funding from state affordable housing programs. If the state stripped Los Angeles of its preferred status, city projects would almost certainly receive less money.

And LA could lose control over some of its zoning regulations through a penalty known as the “builder’s remedy.” Developers would be allowed to propose building essentially whatever they want on their land, provided some of the housing is set aside for low- or middle-income families, and the city would have little ability to say no.

This month, the city responded to the state’s letter with one of its own, reiterating the claim that the transportation commission killed Venice Dell, touting its record on affordable housing and noting that an alternative proposal was in the works. At Park’s urging, the city is investigating building the same 120 units of low-income housing on a separate, nearby parking lot in Venice, though a 2023 city report said that the site was “not suitable” for housing.

Zisser, the state housing official, said the department was still evaluating the city’s response and deciding its next steps. But he appeared unpersuaded by the city’s contention that Venice Dell was dead.

“We are disappointed that the city continues to block an affordable housing project it had previously approved on city-owned land,” Zisser said.

The lawsuits and tension with the state are making multiple councilmembers nervous, with some speaking in favor of Venice Dell during the October council meeting. Raman had requested briefings from the city attorney’s office and city housing and planning departments before the response was sent to the state, but they didn’t happen.

“We need to be able to know that our response to this project is legally sound and not politically driven,” she said. “Given the amount of pushback we’re getting, not just from the litigation but also from the state, it really calls that into question, and that worries me.”